Hamilton, Inc. produces three products using a joint process which provides for $350,000 in joint costs. The products X, Y and Z can be sold at split-off or processed further and then sold. The production level for each product is 5,000 units. The following unit information is also available:

-In processing product Z further,
A) incremental revenues will exceed incremental costs.
B) profits will increase by $8 per unit.
C) profits will decrease by $20,000.
D) additional costs will be less than additional revenues.

Question

Hamilton, Inc. produces three products using a joint process which provides for $350,000 in joint costs. The products X, Y and Z can be sold at split-off or processed further and then sold. The production level for each product is 5,000 units. The following unit information is also available:
 
-In processing product Z further,
A) incremental revenues will exceed incremental costs. 
B) profits will increase by $8 per unit. 
C) profits will decrease by $20,000. 
D) additional costs will be less than additional revenues.

Quizplus · Accepted Answer

The Answer of Hamilton, Inc. produces three products using a joint process which provides for $350,000 in joint costs. The products X, Y and Z can be sold at split-off or processed further and then sold. The production level for each product is 5,000 units. The following unit information is also available:
 
-In processing product Z further,
A) incremental revenues will exceed incremental costs. 
B) profits will increase by $8 per unit. 
C) profits will decrease by $20,000. 
D) additional costs will be less than additional revenues.